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Branded Health Service Medicines (Costs) Regulations 2018

Volume 791: debated on Wednesday 20 June 2018

Motion to Regret

Moved by

That this House regrets that the Branded Health Service Medicines (Costs) Regulations 2018 do not propose any action to be taken in respect of the high cost charged by Concordia and other companies for the drug Liothyronine for the treatment of hypothyroidism, thereby depriving patients of the use of that essential drug, and further do not put an end to the practice of a growing number of Clinical Commissioning Groups refusing to follow the latest guidance from NHS England on making that drug available to NHS patients via referral to thyroid specialists (SI 2018/345).

My Lords, ensuring that patients get quick access to the most effective drugs ought to be one of the essential aims of any Government in relation to the NHS, yet we know that NHS patients are at a serious disadvantage when compared to patients in, as an immediate example, Germany and France. This of course was a major subject in our debate on the Health Service Medical Supplies (Costs) Bill, from which these regulations emanate. While the eventual Act came about because of concern about certain companies abusing their position in relation to the prices of drugs, we also kept our focus on the overriding need to ensure that patients had access to effective medicines. This becomes ever more important at a time when clinical commissioning groups are being seen to ration services more and more widely. I want to bring to the House’s attention a clear example of clinical commissioning groups ignoring guidelines in relation to this area—an extremely common condition—with many patients suffering as a result.

The regulations before us permit the Secretary of State to control the costs of branded health service medicines for companies that do not belong to the voluntary 2014 Pharmaceutical Price Regulation Scheme, belovedly known as PPRS. The regulations set out details of the new scheme. They do not identify specific companies or branded medicines. No doubt the Minister will point out that they apply only to branded medicines, while the medicine that I am dealing with tonight is a generic medicine. It is a device to enable us to debate this important point. However, the fact that the Government brought the legislation to Parliament and are bringing the regulations here shows that they understand that there was a need to deal with abuse in the case of branded medicines. One of the questions I want to put the Minister is: what about generic medicines? How do we ensure effective early action when it becomes likely, or obvious in fact, that some companies are taking the NHS for a ride?

Liothyronine—or T3, as I will call it, because it is a lot easier to pronounce—is the subject of my Motion. As many as one in 20 people in the UK is affected by thyroid disease. The symptoms of an underactive thyroid, which is the most common condition, are serious and require daily medication. Most patients resolve their symptoms with the standard medication, levothyroxine, otherwise known as T4, but there is a subgroup of patients for whom T3 can be an effective option.

T3 was de-branded in 2007, at which point its cost started to increase. Normally, after de-branding, the cost comes down. By July 2017, the cost had increased by a massive 6,000%. The price per pack had risen from £4.46 to a massive £258 in 10 years. Whereas prices on continental Europe range from 2p to 26p, the NHS pays more than £9 per tablet—this is a tablet that needs to be taken daily.

Concordia was the only manufacturer with UK marketing authorisation until very recently. Throughout the price increases, I understand that there was no intervention by the Department of Health until it referred the matter to the Competition and Markets Authority in 2016. In November 2017, the authority provisionally found that Concordia had abused its dominant position to overcharge the NHS by millions for this essential thyroid drug.

A final decision is still awaited. My understanding—I should be grateful if the Minister could confirm this—is that no intervention will be taken by the Department of Health until the final decision is made. Pace our previous debate about why Governments sometimes hold up making decisions while inquiries are ongoing, that reflects some of the problems in Gosport, which we are now seeing in a totally different area.

The trouble with the delay is that patients are suffering. Because of the high cost, in 2017 NHS England ran a consultation under the title Items which should not Routinely be Prescribed in Primary Care: A Consultation on Guidance for CCGs. T3 was included in the list to be considered as an effective product subject to “excessive price inflation”. The issue was not the effectiveness of the drug; it was the fact that it was costing so much money.

There was a lot of consultation, including submissions by the British Thyroid Association and Thyroid UK that T3 should continue to be prescribed in primary care. However, NHS England’s recommendation was:

“The Joint Clinical Working Group therefore recommended the prescribing of liothyronine for any new patient should be initiated by a consultant endocrinologist in the NHS, and that de-prescribing in ‘all’ patients”—

in other words, patients who were already on T3—should not automatically occur,

“as there are recognised exceptions. The recommendation would therefore be changed to advise prescribers to de-prescribe in all appropriate patients”.

So the consultation led to a change in the guidance.

But you have to read the guidance very carefully to understand what it is saying, and it is clear that, to put it at its kindest, clinical commissioning groups have perhaps misunderstood what the guidance stated. That has led to many of them informing clinicians in both primary and secondary care to withdraw T3 from all patients, some of whom have been prescribed it for years, and not allowing them to initiate a prescription, or to offer to refer it to an endocrinologist, as the latest guidance states that they should.

This is causing many patients a great deal of distress. It is making them ill again and impacting on their social and mental welfare. As the Thyroid Trust has pointed out, that is compounded because many GPs are not following treatment guidelines to fine-tune the dose of the standard medication for these conditions or to refer patients to see a specialist if well-being cannot be restored in primary care.

Where T4 is not working, it is important that T3, in combination or in its own, can be prescribed. Some patients are appealing against the decision of their CCGs, but this is daunting for an individual patient to do. I have had one description today, who said: “Applying for T3 is like wading through treacle with your legs tied together”. What is particularly difficult for them is that the criteria for being an appropriate patient have not been listed. If you are appealing against a decision by a CCG, what chance do you have?

We know that at a meeting with NHS England fairly recently, it was admitted to patient groups—Thyroid UK and the Improve Thyroid Treatment Campaign—that what happened was not its intention; its intention was to reduce regional prescribing variations. Both organisations have asked for further guidance for CCGs whereby CCGs understand what they should be doing.

In a debate in the other place and in the noble Lord’s Answer to me, Ministers have said that the South Regional Medicines Optimisation Committee has been considering the issue further and that it will issue a statement in due course. Has this august body issued such a statement? You can find this organisation on the web. It is not very transparent. At its January meeting, the matter was discussed and the minutes of that meeting are on the web. The papers have not been made available. There was a further meeting in May when this matter was on the agenda, but the minutes have not been made available, so the latest we have is what happened in January.

The list of members who attended the January meeting is there, and it is noticeable that 21 professionals attended the meeting with one lay member. Yet the terms of reference of these committees is to look at the outcome of medications for the benefit of patients. It is clear to me that it is a rationing body. Let me take one example. We already have guidance, but the committee was most taken by the fact that a sub-part of the south- west had produced its own guidance. Why is a subgroup of the NHS producing its own guidance when guidance is nationally based?

Patients are left in a hopeless position. It is clear that T3 should be initiated by an endocrinologist, but not what happens afterwards. That is being left for CCGs to work out for themselves, often to the detriment of the patient. Some endocrinologists are saying that they cannot prescribe because the CCG has said no. Some are prescribing, but patients have to visit them for their prescriptions thereafter. Some are trying unsuccessfully to pass care on to GPs, but GPs are saying that they cannot take over care without CCG permission. It is a Catch-22 position.

Some clinicians are helping patients by giving them private prescriptions, but these are expensive. The Brighton and Sussex University Hospitals NHS Trust is informing patients that their only option is to obtain the drug privately. For an NHS body to advise patients as such goes against the whole ethos of the NHS. I must say that I am very surprised at the trust doing so.

I received details yesterday through Thyroid UK of a patient who is looking for a price to purchase T3 privately. She contacted Pharmacy2U and asked for a price for 56 T3 tablets. From four suppliers, only one could supply and that price was £774. That was for 56 tablets, one a day.

I want to echo what Dr Anthony Toft said via the Thyroid Trust:

“The primary fault for the current situation lies with Government and by proxy, NHS management, in failing to deal with”,

the escalating crisis. It is wrong, because what has happened is that the Government and NHS England have failed to deal with this abuse of price, and have put this drug on an exclusion list that was meant for dealing with less effective medicines. Patients are the sufferers.

I am using this debate to ask the Minister to take immediate action to deal with those wholly unjustified drug price increases to ensure that patients do not suffer from the outrageous prices that are being charged and, for once, to tell CCGs that, when guidance has been issued after a comprehensive consultation process, that guidance is to be followed. I beg to move.

My Lords, I declare an interest in this debate, as I am a patron of both the British Thyroid Foundation and the Thyroid Trust. I have heard it said that, somewhere in the Lords, there is always an expert on any subject raised; all I can claim is personal experience. I have suffered from Graves’ disease, which results in an overactive thyroid gland. Once it has had one episode, the thyroid can have an increased incidence of repeated episodes, and I had three in increasing frequency. The cure used often in the UK is to surgically remove the thyroid completely. Suddenly, the patient moves from too much hormone to none at all.

The thyroid, which is a small butterfly-shaped gland in the front of the neck, produces two hormones—levothyroxine and liothyronine—known as T4 and T3. As the noble Lord says, it is much easier to use those words. As T4 is a base stage, T4 makes T3 and the vast majority of patients, perhaps 80% and including me, can convert T4, the inactive hormone, into T3, the active one. Some cannot do so or can only do so inefficiently. The level of research is so low that, alas, we do not know for sure why this is. It may well be a faulty gene.

The trouble with thyroid patients is that their experience of the disease is so varied and the effect on their bodies is sometimes so profound, that they can be “hard to treat”. This is a marvellous medical euphemism that carries a wide range of patients with it, from ones who feel well when they are actually quite close to death, like me, to those whose low thyroid level makes them apathetic, befuddled and exhausted. The latter are the most frequently occurring cases. The majority of them are female and they are often overweight, finding that diets tend not to work for them, however hard they try to lose weight. As the thyroid affects the speed of every single cell in the body, including the brain, a nasty aspect of the disease is known as “brain fog”. That is the inability to think anything through at all, let alone explain what is wrong with you. That aspect, coupled with hormone tests that can declare that everything is within normal limits when they are still wrong, makes some patients particularly “hard to treat”.

With a high level of thyroid activity, life may feel quite pleasant. Even Brexit seems to be simple. A high thyroid level has something in common with being mildly overserved, even tipsy, and yet I know someone who sadly died of this disease and, for a few, the symptoms can be dramatically unpleasant, even as severe as psychosis. With a low level of thyroid, everything can be too complex, too difficult, too depressing or gloriously clear but wrong. Endocrinologists are doctors with immense patience. Overall, any imbalance in thyroid hormones, which can occur rapidly or very slowly, from high to low or low to none, can trigger brain fog and a range of other debilitating and diverse symptoms.

This liothyronine problem affects a group of patients who may appear to have the right level of T4, but who cannot make sufficient quantities of T3 from it. T3 was made by a single supplier for a time, Concordia, a company that I have met and been impressed by. It deals with a wide variety of generic drugs to be supplied to the Department of Health. These drugs are subject to several layers of regulation, including on price and quality. Most important is consistency, as the thyroid patient is peculiarly sensitive to inconsistency. Consistency depends in part on modern methods of manufacture, and the problem that Concordia faced, it tells me, was a need to update the manufacturing equipment with a large capital investment for a small number of patients.

To put the problems into context, the Department of Health buys a vast number of generic drugs. Millions of different patients need thousands of different drugs, and it is amazing how few problems occur. This is because of the great work done by the unsung heroes of the department’s regulatory agencies. All this takes place without much political input, and probably is the better for that, but a price that goes up so much raises an eyebrow or two, particularly compared to a price that is so much lower abroad. Even if the price increases had been agreed with the department, as Concordia informs me they were, the solution is likely to involve negotiation between the manufacturer and the department. Competition is likely to play a part here, and I gather that there are now three manufacturers in the market to provide T3 for UK use and prices are falling.

The bottom line is that, where there is a portfolio of generic drugs, used by different patients for different syndromes, the marginal price of any one drug in any one quantity is somewhat arbitrary. Should it be a loss leader or priced as the star of the portfolio? It is clear to me that the pricing, like thyroid disease, only becomes noticeable when it varies quickly or goes out of control. What caused a problem was misinterpretation of health department advice into suddenly not prescribing T3 to patients who had been happily taking it for years. I am not sure that a referral to the Competition and Markets Authority did anything other than raise the stakes, when negotiation is surely the best way to deal with the problem.

While liothyronine is available at a lower cost from European suppliers, there have been calls for the NHS to source directly from overseas. This initially may seem appropriate, given that patients are currently being told to purchase directly from these overseas suppliers themselves, with a private prescription from their NHS GPs, who tell them that their practice or CCG will not pay.

The Thyroid Trust has given permission to me to share the alarming case of Maureen Elliott in South Thanet. Maureen was well for 10 years on liothyronine and agreed to stop taking it when her doctor flagged up the high cost to the NHS. Subsequently becoming very unwell without it, she was referred to an NHS endocrinologist, who confirmed that she should have it, yet the instruction she was given was to buy it herself from abroad. With prices from different suppliers varying wildly, from more than £600 to £50 a packet, and inconsistent quality, she has found the whole experience extremely stressful as well as expensive. Why should she and others have to do this as individuals, when the Department of Health could be doing it, presumably with the capacity to drive a better bargain?

However, if the quality control requirements of the UK’s Medicines and Healthcare products Regulatory Agency have triggered prices here to be higher than elsewhere, is the liothyronine from manufacturers that do not hold a UK marketing authorisation of questionable quality? Given the negative effect on patients such as Maureen, perhaps the Minister can help to stress to doctors that T3 has not been banned, that he agrees that some patients need it, that although it is expensive it is valuable to certain patients and that doctors should not restrict access for existing patients prior to clinical assessment by a specialist.

I want to restrict my observations to the case of the treatment of hypothyroidism, and elaborate just a little on the wise words of my noble friend Lord Hunt of Kings Heath.

We have here an unhappy coincidence of bureaucratic errors on the one hand and what can be described only as corporate greed on the other. The end result is that patients with hypothyroidism are suffering. I suppose that I should just say a little about this condition, in which these patients fail to produce enough of their own thyroid hormone, for one reason or another. Although I am no longer on the medical register, I do not feel too constrained: it causes a range of unpleasant symptoms and can be life threatening. It causes symptoms, some of which may sound familiar to your Lordships, including extreme tiredness and a general slowing down, which makes you gain weight, thickens your skin and makes you lose hair. It comes on insidiously, so that it can sometimes be difficult to diagnose. It is worth noting, as I think my noble friend said, that up to 5% of the population, or one in 20, are said to suffer from hypothyroidism—and, worst of all, it can cause heart attacks, if not treated.

Yet treatment is very easy indeed—just one tablet a day of the hormone thyroxine gets rid of all the symptoms and can make people normal again, which works for the vast majority. But here is the rub: a few patients do not feel better, and they need to take the more active metabolite of thyroxine, liothyronine, or T3, to make them well. There is some controversy over why some patients need that more expensive treatment. Do they have a problem with converting thyroxine to the active principle or not? That has not been resolved scientifically, but there is little doubt that, clinically, some patients get better only on the active metabolite, T3. That being so, clinicians should be able to prescribe it. Certainly, that is the case in many countries around the world.

Prescribing T3 here in the UK was never a problem until 2007, when the Canadian manufacturer, Concordia, got hold of it and was given the sole contract by the NHS to produce it. It was then that, as a monopoly supplier, it put the price up several-thousandfold, as we have heard, so that now the price has risen to over £900 for 100 tablets. Then, of course, NHS England found it increasingly unaffordable. So instead of trying to find cheaper suppliers, it put in draconian conditions on doctors under which it may be prescribed. On top of that, those conditions are so ambiguous that CCGs, GPs and consultants are fearful of prescribing it, so they have stopped. As we have heard, patients who have been on it for years now cannot get it and suffer the consequences. So what do the patients do? They go online and buy it privately in Europe for around €30, instead of £900 for 100 pills.

I have three questions for the Minister. Will the Government try to move the Competition and Markets Authority along after its preliminary hearing that the manufacturers should repay the several million pounds that they owe to the NHS? Will they consider purchasing the medicine from an alternative supplier, possibly elsewhere in Europe, for a fraction of the cost? Will he press NHS England to produce some straightforward, unambiguous guidance for patients and doctors about how it can and should be prescribed? I would be happy to help, if he would like that.

My Lords, I ask my noble friend to turn his intelligence and attention to how the NHS can get best value in the purchase of out-of-patent medicines, branded and generic. I have had the pleasure of reading the 2014 pharmaceutical price regulation scheme. If any noble Lord is in need of tickling his belly button with his jaw, I suggest that he does the same. It is the most astonishing system, guaranteed to produce lush profits for manufacturers, giving the NHS almost no purchase whatever on the price being charged. It is done in the name of promoting innovation and promoting the UK industry, but there does not seem to be the level of intelligence—meaning not mental intelligence but investigation and the understanding— that would be necessary to make sure that that was the case.

There is a great deal to be gained for the NHS by challenging this. As it comes up for review at the end of this year, it is a very good time to try to bring some commercial sense into it. The noble Lord, Lord Hunt of Kings Heath, has illustrated very well one particular compound that is causing problems. My noble friend will know that I am interested in apomorphine, which is presently used for treating Parkinson’s disease, a very simple chemistry devised in the 19th century by boiling morphine with concentrated acid. It does not actually have any morphine-like properties. You can buy it easily on the wholesale market at one-1,000th of the cost charged to the NHS for apomorphine in pill form. There must be some added value between a half-kilo bottle of apomorphine and a succession of pills—but a thousand times?

Again, there is one supplier. It is not a big market, worth a few tens of millions a year, and someone else does not come in because there is the barrier of the regulatory agency. If you came in, all that would happen is that the existing supplier would drop prices ahead of you, and your costs in getting your authorisation and setting your marketing system up would never be recovered. Although it is nominally open to challenge, actually it does not work that way. You just get one company holding that monopoly year after year and being able to make huge profits out of a steady market. It is not generating a market or innovating in any significant way; it is just a market that exists because this is a current pattern of treatment that has been demonstrated to work by physicians in that area.

I have some suggestions to my noble friend. Why not look at a much more comprehensive system of tendering? Imagine that the NHS was to say that it knew roughly how much apomorphine it was going to use in five years and that it would let a contract for five years’ supply, including the cost of getting permission from the medicine regulatory agency, and see who would bid it a price. It is inconceivable that you would not end up with the NHS buying five years’ supply for the cost of six months’ supply previously. The risks to the NHS compared with the current system must be really small.

Alternatively, why do not we create some centre of excellence in fine organic chemistry—say, in Huddersfield University, or somewhere like that? My work shadowers are from there this week, so I am biased in their favour. We could get them to act almost as a state generic medicines manufacturer, and be responsible for the supply of these relatively simple medicines, such as apomorphine. I imagine that T3 is pretty easy to make by those stages, too. It would bring real benefit in terms of intellectual knowledge and the ability of our manufacturing sector to the UK. There are other ways in which to do these things, it appears to me. I am sure that my noble friend can think of some. Possibly just thinking of some and being really serious about pursuing them will be enough to bring the current manufacturers to the table.

Whatever we do, we cannot continue with the current system. The NHS is paying tens of billions of pounds a year for these medicines, and it is paying far too much—and it is time that that ended.

My Lords, I thank the noble Lord, Lord Hunt of Kings Heath, for bringing this slightly interesting regret Motion.

It is clear that the issue at stake is the appropriate treatment of hypothyroidism. We have to trust clinicians to prescribe based on what they consider is best for their patients, as the noble Lord, Lord Turnberg, said. I have done an awful lot of reading about this over the last few days, and, although it depends on which article you read, it seems that a significant number of women have this condition: one figure I was given was 10%. In fact, for the last 25 years I have been diagnosed as hypothyroid. I take T4— levothyroxine—which is cheap as chips and costs the NHS about £1.30 every month. But of course, not everybody responds to that, and the alternative is the very much more expensive T3. Some 10% to 20% of patients diagnosed with hypothyroidism come into this category. It is therefore important that the patient receives the right drug. We have heard completely unacceptable tales of patients, as a result of decisions made by clinical commissioning groups, surfing the internet to see what they can get. I did exactly the same last night—having a look to see what I could get—and, again, the T3 was ridiculously expensive, whereas T4 was hardly worth buying online as you could get it very much more cheaply.

What is to be done about this? I was going to explain what it is like when you develop hypothyroidism, before you are diagnosed, and so I thank the noble Lord, Lord Borwick, because his description was lovely: “pathetic, befuddled and exhausted”. I went to see a doctor because my brain was in a fog. I explained it to him and he said, “What do you expect? You work full time and you have two toddlers”. So I was sent away. Curiously enough, at a family event—a lot of my family are doctors or nurses—my mother-in-law asked me, “How long have you had a thyroid problem?” and I said, “I didn’t know I had a thyroid problem”. I went to see my GP, who said, “No, you haven’t got a thyroid problem at all. Who said you had one? Gosh—what does a paediatrician know about it?” Eventually, I had to leave my practice and go to another one to get a diagnosis. I am sure that that is not normal, but it was quite an interesting experience for me. Since then, I have been as fit as a flea. The medication works like a magic charm; very quickly you feel normal and well again. So I cannot overstate to Members of your Lordships’ House how important that prescription was.

I emphasise to the Minister what other noble Lords have said today. We must use the purchasing power of the NHS to drive down the costs of T3 in order to make the argument go away. That might be done by effective negotiation, as the noble Lord, Lord Lucas, said, or in another way, but it is completely scandalous that patients have to buy their own drugs online, and CCGs should therefore review or rework their guidelines as a matter of urgency. Drug companies must not hold the NHS to ransom over the cost of medication that will make patients feel absolutely well again.

On the issue of the costs of medication, one of the non-medical side-effects of having a diagnosis of hypothyroidism was that any other drug I had became free. It is on a list of conditions which, if you have them, mean that any other medication you need becomes free. At that time I was in my early 30s and working. It was very nice to have free prescriptions; I tried to pay for them but they would not let me. However, it means that for the NHS, an awful lot of money is spent inappropriately. Can the Minister give an indication of whether the department has any indication of how much this costs the NHS? I am happy for the NHS to pay for my levothyroxine, but it should not have paid for all other medication I was in receipt of—although, now that I am old, it comes free anyway. How sustainable is this in the current climate, and when was the principle last reviewed?

My takeaway issue for all this is that, whatever happens, we should ensure that the cost of T3 is driven down. However, I would also like the Minister to take this other issue away and—not as a matter of huge urgency—come back to me with some answers.

My Lords, I thank my noble friend for tabling this Motion and for his excellent speech setting out the concerns we all share about NHS patients getting access to the drugs they need and how a number of CCGs are in effect placing a ban on expensive branded medicines—in this case ignoring NHS England’s advice concerning T3 in the treatment of hypothyroidism. I look forward to the Minister’s response to the key questions put forward by noble Lords on this issue.

The Motion has the full support from these Benches. I also commend the work of the British Thyroid Association and Thyroid UK in highlighting this issue, and the very helpful information on their websites, as well as the expert explanation from my noble friend Lord Turnberg on hypothyroidism. The websites include case studies of patient voices which clearly show the impact and suffering of patients who are either denied T3 or who are taken off it because of a decision made by their CCG. It is especially upsetting when patients who have successfully taken the drug for a number of years suddenly have to go back on to a drug, mainly T4, which they already know does not provide them with the treatment they need or will make them ill again. The case studies refer to both the T4 drug and the natural desiccated thyroid—NDT—drug, which I understand is the treatment given before T4 came on to the market but which is not now available in the NHS as it has to go through the Food and Drug Administration process, and it is not known when the branded NDT products will be licensed.

My noble friend and other speakers described their concerns over current CCG decisions that go against NICE guidelines and the advice of NHS England, and the increasing rationing of key services, so I will not repeat them and will await the Minister’s response. The NHS England recommendation and guidance on T3 needs to be clear and unambiguous. I hope that the Minister will acknowledge the confusion and concerns, and will ensure that NHS England informs CCGs that they must both comply with their guidance and amend it to end the scope for CCG misinterpretation. I hope that he will also acknowledge that access to T3 on the NHS is a matter of urgency for many patients and that he will give serious consideration to the call from Thyroid UK and ITT for the procurement of T3 from outside the UK for NHS prescriptions until its UK cost comes down.

On the regulations, I note paragraph 4.7 of the Explanatory Memorandum, which deals with provisions of the Health Service Medical Supplies (Costs) Act 2017 that have been included. This includes the promise of the annual review of the operation and objectives of the statutory scheme which is to be published and put before Parliament. Can the Minister tell the House what the current thinking is in terms of the review process and timing, and say when he would expect the first review to be completed?

The impact assessment also states that the implementation of these regulations will generate a saving of £33 million to the NHS between April 2018 and March 2019. The Department of Health and Social Care says that this will enable the provision of additional treatments and services estimated to provide NHS patients with an additional 2,213 quality-adjusted life years, valued at £133 million. Can the Minister explain to the House exactly how the Government have calculated the savings, and can he give more details of how this money is to be spent in the NHS?

The Explanatory Memorandum also says that the regulations set out other instances when the Secretary of State can give a direction specifying the maximum price of drugs—for example, when there are supply issues with respect to a particular branded health service medicine and the Secretary of State is satisfied that a new temporary minimum price needs to be provided to help resolve the supply issue. Can the Minister explain to the House how the Secretary of State is to decide on the temporary minimum price?

Finally, in respect of the provisions in the regulations for manufacturers and suppliers to pay 7.8% of their net sales income to the Government, the impact assessment provides for those in the PPRS with annual NHS sales above £5 million to make percentage payments based on the difference between allowed percentage and actual percentage growth in NHS expenditure on branded medicines. Can the Minister provide more clarity on how this 7.8% figure has been reached?

My Lords, I begin by thanking the noble Lord, Lord Hunt of Kings Heath, for tabling the Motion on this topic, and I thank all noble Lords who have contributed for their, as ever, wise and incisive interventions.

As we have discussed this evening, there are two separate but intertwined issues here. The first is the appropriate treatment and associated clinical guidance from NHS England to CCGs about the use of the two drugs under discussion in the treatment of hypothyroidism. The second is the powers we have and the actions we take in clamping down on unjustified high prices in generics. I will deal with them in that order, as well as answering other questions that noble Lords have posed.

As we have heard in very evocative descriptions from my noble friend Lord Borwick and the noble Baroness, Lady Jolly, hypothyroidism can be a very debilitating condition in some perhaps slightly unexpected ways, but it can affect every area of someone’s life. One of the principles on which the NHS is founded is that, if someone has a clinical need for a medicine, it is right, provided that it can be done cost-effectively, that they get the most appropriate medicine for their condition.

The drug levothyroxine, T4, is beneficial for the majority of patients with hypothyroidism, as we have heard, but it does not treat the condition in all patients. For some, the alternative drug, liothyronine, commonly known as T3, which is the subject of this evening’s debate, is a treatment which better alleviates their symptoms. NHS England has set out that liothyronine should be prescribed for patients only where levothyroxine does not alleviate symptoms. Following its recent consultations, NHS England guidance states that, where clinically appropriate, liothyronine can be prescribed but its use should be initiated by a consultant endocrinologist in the NHS.

My noble friend Lord Borwick shared the case of Maureen Elliott, and I would be very grateful to him if he could give me details of her case. The care and medicines that have been provided to her do not appear to be in line with NHS England’s guidelines, and that obviously raises some very serious concerns. As I have said, patients for whom liothyronine is deemed clinically appropriate should receive it on the NHS and should not be asked to purchase it abroad. I ask my noble friend and indeed all noble Lords who have contributed to this debate to share details of the case. Tonight, I will commit to pursuing further with NHS England ways in which they can clarify to CCGs the guidelines setting out the circumstances under which liothyronine should be prescribed, including looking at whether greater clarity on the criteria for appropriate patient usage is merited. I will also inform the House—through a letter to the noble Lord, Lord Hunt, a copy of which I will place in the Library—about the progress that we are making on the regional medicines optimisation committee.

I want to touch on one other area that my noble friend Lord Borwick described, and that is the poor understanding of that group of the population who are not able to turn T4 into T3. He mentioned that there might be a genetic factor and I would be interested in pursuing that further. Clearly, some very interesting work on rare diseases is going on in the NHS at the moment through the 100,000 Genomes Project. This might be a qualifying illness where the conversion does not take place naturally, and that might be something that we can pursue. I will take that up with him separately.

As the noble Lord, Lord Hunt, freely admitted, the Motion expresses regret that the Branded Health Service Medicines (Costs) Regulations 2018 do not propose any action in respect of the high cost charged for liothyronine. However, he also knows that this relates to the new statutory scheme to regulate the cost of branded medicines, so that is not the vehicle by which we would act in generics. Nevertheless, it provides a good opportunity to discuss the actions that we are taking, not just in regard to this medicine but more broadly, to clamp down on excessive prices for generic medicines.

For unbranded generic medicines, the Government do not set selling prices. Instead, we rely on competition between suppliers to keep prices down. Several noble Lords expressed concern about the prices that we pay for medicines, but I should stress that the available evidence demonstrates that in general our system works well. Recent studies by the OECD and Milbank Quarterly have shown that the UK has among the very lowest prices for generic medicines as a group in the developed world. However, there are occasions when there are only one or two suppliers, so there is no effective competition.

As several noble Lords set out, for a long time Concordia was the sole supplier of liothyronine. That is why the department took action in the summer of 2016, asking the Competition and Markets Authority to investigate this product. The CMA has very extensive powers to investigate companies suspected of abusing a dominant position in the market, and my department has been supporting the CMA in its investigation. As a result of this investigation, the CMA provisionally found that the manufacturer abused its dominant position and overcharged the NHS by millions of pounds for liothyronine tablets. The CMA also found that, although the price of liothyronine went up by almost 6,000%, production costs remained broadly stable.

I should stress that the findings are provisional at this stage. There has been no definitive decision that there has been a breach of competition law. The CMA is carefully considering representations from the company before deciding whether the law has been broken. In response to the question from the noble Lord, Lord Turnberg, I hope that the CMA’s decision will be issued this year. If it finds that the company has infringed competition law, it can issue it with a penalty of up to 10% of the company’s global turnover and direct it to lower the price. Noble Lords should be assured that on top of any CMA penalty, where companies have breached competition law we will also seek damages and invest that money back into the NHS.

In addition to the CMA’s investigatory work, the department, since last year, now has stronger powers to set the prices of generic medicines following the Health Service Medical Supplies (Costs) Act 2017, which we discussed at about this time last year. We can now also set the prices of generic medicines from companies that are members of the voluntary PPRS. Concordia is in the PPRS, so it is important to say in response to the question posed by the noble Lord, Lord Hunt, and my noble friend Lord Borwick that before the 2017 Act we would not have been able to act on the price, even if we had wanted to, without referring it to the CMA.

The department has also taken new powers to require pharmaceutical companies to disclose information about the sales values and costs of medicines in order to support the department’s powers to set selling prices. These are set out in the Health Service Products (Provision and Disclosure of Information) Regulations 2018, which come into force on 1 July.

Several noble Lords asked why we are not setting a selling price for liothyronine. I also note that my noble friend Lord Borwick said that Concordia had told him that the department had agreed the price of liothyronine. However, following investigations in the department, I can confirm that that is not the case.

On the face of it, I understand the attractiveness of price setting in this case but at this point in time, when the CMA is carrying out an investigation—and notwithstanding the discussion we had earlier—it is the right approach for that to continue, while also taking steps to make sure that appropriate prescribing behaviour goes on within the NHS. Therefore, in this case I believe it is appropriate to separate the two issues. I have confidence in the CMA’s work on this case and I want it to conclude its investigation and come to the judgment that it sees fit.

However, this is not the only tool in our box. We are actively monitoring the price increases of other generic medicines and, where they are not already under investigation by the CMA—and once our information requirements are in place—we will open discussions with some companies shortly, although noble Lords will appreciate that it would be wrong to disclose which companies or which drugs are involved at this stage. Where we believe that a lower price is justified, we may consider imposing a price if the company is not willing to lower it voluntarily. I can confirm to the House that we have the powers to do so and are prepared to act if necessary.

However, we need to act carefully. Typically, where there is little or no competition for an off-patent or generic medicine, this is because, as has been stated, it is a relatively low-volume product. As a result, manufacturers do not benefit from economies of scale and, if they think the price is too low, they may withdraw their product from the market. This would mean that patients would not have access to their medicines at all, which could obviously have detrimental impacts. We have seen that happen in other European countries.

However, in the case of liothyronine, I am pleased to tell the House that there are now multiple marketing authorisations in the UK for the drug. Increased competition traditionally leads to more resilient supply chains and lower prices. We will be watching carefully to see whether that happens in this case and are prepared to act if it does not.

In response to a specific question from my noble friend Lord Borwick about whether regulatory requirements from the MHRA were the cause of the price increase, I know that Concordia suggested this and we have discussed it with the MHRA. However, it is unlikely that that could have led to a price increase of 6,000%. Liothyronine is an old product and when Concordia applied for a marketing authorisation, it was only right that the MHRA required compliance with the minimum standard. But as I said, I do not believe that is a justification for that scale of increase.

My noble friend also talked about imports from other countries. Medicines licensed in the UK and other member states can be parallel imported as long as the imported product has no therapeutic difference from the UK product. As has been stated in this case, small differences in the formulation can significantly change the therapeutic effect on the patient. That is not to say that imported products are unsafe, but if a patient changes to a different source of the product their symptoms may not be controlled to the same extent, which only emphasises how important it is to get the right medication for the right patients through the NHS.

My noble friend Lord Lucas made some observations about the current operation of the PPRS. It undoubtedly has some flaws, which we will attempt to rectify as we negotiate a new one. In 2016-17, the PPRS paid £1.7 billion back to the NHS from drugs companies. I should also point out that it does not apply to unbranded generics, of which liothyronine is one, but it obviously applies to the vast bulk of medicines bought by the NHS. He suggested tendering for generics, which the Commercial Medicines Unit and NHS England are starting to do. It is also one of the options under consideration for getting the prices of specials down, which, again, was something we made progress on in discussions on the Bill last year.

My noble friend made an interesting and radical proposal for a state generics manufacturer. Intermountain Healthcare, which serves the Mormon community in Utah, is setting up a not-for-profit generics manufacturer. I have asked the department to get in touch with it, to understand the work it is doing. It might be possible through a university but I am not sure that state aid rules would allow us to set up a state-owned generics manufacturer. Once we have left the European Union, however, perhaps that could be one of the Brexit dividends.

The noble Baroness, Lady Jolly, asked specifically about the cost of other free medicines. Prescription entitlements were last reviewed under the last Labour Government, who looked at the cost of making all drugs free, which would be about £500 million. As the noble Baroness knows, when the coalition Government came in we decided that that would not be the right use of money and there is no intention to review that at this point. I am sorry to disappoint the noble Baroness.

The noble Baroness asked specific questions about the regulations themselves, which I think was the first time they were discussed this evening. I am grateful to her for that. I will need to write to her on some of the specifics but the review will be completed on 1 April 2019, so I can provide her with that reassurance. We have calculated the QALY benefits of specifying prices in the usual way and I am happy to write to the noble Baroness on the technical aspects of that.

She also asked about deciding on temporary pricing. As I have hinted, this is something we are starting to test. We are taking on these powers and we need to move cautiously. Ideally, we do not want to exercise them at all but if we do, we will do so in consultation with industry bodies.

I hope I have answered noble Lords’ questions. I thank the noble Lord, Lord Hunt, for using the regulations to highlight the challenges we face in prescribing the right medicines for hypothyroidism and in making sure that we have the right powers to ensure that the NHS is not being ripped off by unscrupulous providers of any kind of medicine. In the commitments I have given to pursue this issue, I hope I have satisfied the noble Lord, Lord Hunt, and other noble Lords of the seriousness with which we take this issue. On that basis, I hope he feels able to withdraw his Motion tonight.

My Lords, I am very grateful to the Minister and to other noble Lords who have taken part in this interesting debate. The noble Lord, Lord Borwick, really put his finger on it when he said that the key point is the misinterpretation of guidance. As my noble friend Lord Turnberg said, essentially, the system has gone the wrong way about this. Instead of trying to deal with the prices, guidance has been produced that is pretty restrictive and then CCGs have reinterpreted the guidance to make it even more restrictive. As the noble Baroness, Lady Jolly, said, the problem is that if you cannot drive down the cost of T3, the emphasis is almost bound to be on clinical restrictions, which are hard to start with and are then misinterpreted.

On the point raised by my noble friend Lady Wheeler, who asked a number of questions about the regulations before us, I just say to the Minister that I hope that the review, to be published in April 2019, could be shared with noble Lords in one way or another, because I think that there will be general interest in it. I am grateful to the Minister, because he said that the Government are committed to pursuing further with NHS England the way that the guidance has been interpreted. He has also promised me a progress report on the delightful workings of the south regional medicines optimisation committee, which I am sure all noble Lords will be very anxious to see. He has also invited us to send to him details of cases where there is clear evidence that the guidance is not being pursued. We will pursue that; it is all very helpful.

On the issue of pricing and competition, I very much take the Minister’s point about the unbranded generic market generally working well; I agree with him. Clearly there is an issue when it is not working well. One question I will put is whether the department should have intervened earlier; I think it might have done. Hopefully, in the future, it will be able to do so. On PPRS, the noble Lord, Lord Lucas, made a very interesting intervention—but, from my point of view, the PPRS agreement was a good one, as it basically stabilised the costs of branded drugs to the NHS because of the rebate scheme, which meant that, if the costs went above a certain limited level, the extra cost was paid back into the NHS. The problem is that it was not paid back to the NHS—it was paid to the Treasury, because it discounted in advance the likely rebate. The tragedy—and why this is very important in terms of future negotiations on PPRS—is that, if that rebate money had then been routed towards investing in new medicines, we would have had a win-win situation where, essentially, the pharmaceutical industry would have paid for its investment in new medicines. The noble Lord will know that one of the issues facing the branded pharma industry is that the NHS is a lousy customer when it comes to the uptake of new medicines. This is a separate issue, but one that is really important for the future.

Overall, I am very grateful to noble Lords who have taken part in this excellent debate. Considerable progress has been made and the commitments given by the Minister are very welcome indeed. I beg leave to withdraw the Motion.

Motion withdrawn.

Sitting suspended.